Why cost cutting without operational improvement creates fragility, not strength.
There is a version of being “lean” that makes an organisation sharper, faster and more focused. And then there is the version we are starting to see more often as we head towards 2026, the one where businesses quietly hollow themselves out while believing they are becoming more efficient.
On the surface, the logic is familiar. Margins are tight, growth is unpredictable, and the pressure to deliver more with less has never been higher. So companies cut. They remove layers. They reduce teams. They streamline functions. They pull back on investment. And they reassure themselves that this is what smart leadership looks like in a changing market.
But cost cutting and efficiency are not synonyms. One reduces what you do. The other improves how you do it. When these ideas are blended together, organisations drift into the wrong kind of lean. They become lighter, yes, but also slower, more fragile and increasingly unable to execute.
We have already seen early signs of this across the market.
Amazon announced around 14,000 corporate job cuts as part of a push to reduce layers and reorient towards its biggest priorities. That ambition makes sense, but only if the underlying operational machinery becomes simpler, faster and more consistent at the same time. Without that, cuts just place more strain on the teams left behind.
WPP has removed roughly 7,000 roles in the past year while revenues have declined. Their new leadership talks about reimagining processes and embedding new behaviours in an AI first future, which is a necessary shift. But unless these operational improvements land before the cuts take full effect, the organisation risks losing capability faster than it can build it.
bp multibillion dollar cost programme, which includes reducing more than 5 percent of its workforce, highlights the same tension. The stated goal is to create a simpler, higher value organisation. But simplicity only creates value if customers and frontline teams feel the improvement in how things are delivered, not the gaps left behind.
None of these decisions are inherently wrong. In many cases, they may be strategically sound. The issue is not cost cutting, it is cutting before improving.
When organisations skip the improvement stage, they mask inefficiency instead of fixing it. They remove the people and processes that currently compensate for structural weaknesses without addressing the weaknesses themselves. The result is predictable. Delays increase, quality drops, customer experience worsens, and the teams who remain spend more time firefighting and less time delivering.
The reality is that meaningful efficiency only appears when three things happen.
First, the organisation becomes genuinely better at delivering outcomes. Not tasks or activity, but results. Lower cost per acquisition, lower cost per resolved ticket, smoother fulfilment, fewer errors. If those metrics are not improving, cutting simply reduces your capacity to cope.
Second, customer experience moves forward rather than backwards. Journeys become faster, friction falls, handovers disappear, complaints reduce. Cutting while these indicators are static or declining only guarantees one thing. Customers will feel the cost savings before they feel any benefit.
And third, the internal operating environment becomes clearer and simpler. Teams know what matters. Tools are used properly. Processes are streamlined. Decisions take less time. Execution becomes more consistent. Without this clarity, any reduction in resources just magnifies existing problems.
When these foundations improve, cost cutting becomes logical. It removes waste rather than expertise. It eliminates duplication rather than depth. It becomes the natural by product of a business that works better.
When these foundations do not improve, cost cutting becomes a risk. It erodes capability, harms customer experience and weakens competitive advantage while creating the illusion of progress.
The companies that will lead in 2026 will not be the ones who become the leanest. They will be the ones who become the right kind of lean. The organisations that simplify their operations, sharpen their priorities and strengthen how they work before they remove cost.
Cutting is easy. Improving is harder. But only one of them builds a business capable of growing.
